New Delhi President Ram Nath Kovind has issued the Banking Regulation (Amendment) Ordinance, 2020. With this, all the urban and multi-state co-operative banks have now come under the supervision of the Reserve Bank (RBI). The rules have recently been amended to protect the interests of depositors of these co-operative banks. A statement issued by the government on Saturday said that this ordinance has ensured an amendment to the Banking Regulation Act, 1949, which is applicable to cooperative banks. The statement said that the objective of the ordinance is to protect the interests of depositors and strengthen cooperative banks by ensuring better governance and monitoring.
The statement issued by the government said that cooperative banks will also be brought within the purview of the rights already available with the Reserve Bank of India (RBI) in relation to other banks, to ensure orderly banking regulation by adopting a professional approach. And with this, their access to capital can also be made possible. These amendments have not reduced the existing rights of state registrars of cooperative societies under state cooperative laws. These amendments do not apply to Primary Agricultural Credit Societies (PACS) or Co-operative Societies, whose primary objective and principal business is to provide long-term finance for agricultural development, and which refers to the term ‘bank’ or ‘banker’ or ‘banking’ And who do not act as drawee of checks.
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Section 45 of the Banking Regulation Act has also been amended through the ordinance to plan restructuring or merger of a banking company to protect the interests of the general public, depositors and the banking system and to ensure proper management. Even without issuing a temporary moratorium on the functioning of the banking company concerned, it would be possible to plan its reorganization or merger, so that any disruption in the financial system could be avoided altogether.
There are around 1,482 urban co-operative banks and 58 multi-state co-operative banks across the country. These banks have deposits of 8.6 crore people. This step is considered to be very important given the uncertainties recently encountered in several other co-operative banks, including Punjab and Maharashtra Co-operative Bank
